The past 18 months have been intense for WeWork. Ever since co-working space specialists decided to list an IPO, which was subsequently scrapped as the company’s rapid expansion business model raised a few concerns, it has been on massive cost cutting spree following the resignation of co-founder Adam Neumann.
One would think the COVID-19 pandemic and global lockdown would also have impacted business, but recently appointed chairman, Marcelo Claure, has explained to the Financial Times (paywall) that the company is on target to reach its operating profitability goals by the end of 2021.
As TechCrunch points out, Claure also serves as CEO of SoftBank, which invested $18.5 billion in WeWork as a means of keeping the company afloat. The publication adds that in order to keep its operating profitability goals by the end of next year, the aforementioned cost cutting measures have been intensified.
These include selling WeWork’s stake in other startups and ventures over the past 12 months, as well as drastically reducing the size of its workforce, which is reported to have gone from 14 000 in 2019 to 5 600 this year.
While the company has not commented on other measures it plans to take in order to stay profitable and reach its targets, we’ve seen locally that WeWork has continued to charge its members their usual rental fees during lockdown, despite the majority not being able to access the buildings in which these offices are situated for a number of months.
Consequently many members have been cancelling their leases with WeWork, but overall the company has been able to ride things out under the current circumstances.
“Despite the impact of the COVID-19 pandemic, which forced many people to work from home, Claure said that companies have been leasing spaces from WeWork to serve as satellite offices close to where employees live. But he also said that revenues were flat during the second-quarter because many tenants terminated their leases or stopped paying rent,” writes TechCrunch.
With those measures outlined by Claure assisting in the interim, it is likely that WeWork is hoping things will go back to normal when the COVID-19 pandemic is under control next year.